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Q7. A portfolio manager anticipates a major increase in market interest rates. Which trading strategy would be most likely to generate above average returns in a bond investment? Purchasing:
A) short maturity bonds with high coupon rates.
B) bonds that will increase the average duration of the investment portfolio.
C) long maturity bonds with low coupon rates.
Q8. Which of the following is closest to the maximum price for a bond that is currently callable?
A) Its par value.
B) Its par value plus accrued interest.
C) The call price.
Q9. Which of the following statements about the call feature is least accurate? The:
A) call feature lengthens the bond's duration, increasing price risk.
B) call feature exposes investors to additional reinvestment rate risk.
C) call feature reduces the bond's capital appreciation potential.
Q10. Maria Cavilero, a bond investor, is most concerned with price volatility. All else equal, which of the following fixed-coupon bonds would she most likely buy? A fixed coupon-bond with:
A) 10 years to maturity and an 8.5% coupon.
B) 10 years to maturity and a 6.5% coupon.
C) 15 years to maturity and an 8.5% coupon.
Q11. Which of the following statements about how the features of a bond impact interest rate risk is FALSE?
A) A lower-coupon bond is more sensitive to interest rate movements than a higher-coupon bond (all else equal).
B) An inverse relationship between interest rates and bond prices means that the greater the change in interest rates, the less the change in fixed-coupon bond prices.
C) Bond price movements depend upon the direction and magnitude of changes in interest rates.
Q12. Which of the following bonds has the highest interest rate sensitivity? A:
A) ten year, option-free 6% coupon bond.
B) ten year, option-free 4% coupon bond.
C) five year, 5% coupon bond callable in one year.
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发表于 2009-3-2 15:20
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